Experience with real estate and lending investor clients reminds about the California one action rule and that mortgage loan contract enforcement can be tricky in this state.
When a lender wants to enforce terms of a loan secured by California real property, certain issues must be considered.
California one-action and antideficiency rules - complex laws that are reviewed at other articles and blogs
Letters of credit - not generally but sometimes subject to the anti-deficiency issues
Multi-state collateral - Borrowers facing foreclosure of loans secured by property in other states sometimes seek antideficiency and one-action protections in California.
Indian land - Some local markets have financing at casino developments on Indian lands (lands held by Bureau of Indian Affairs in trust for certain Native American tribes, which is covered by US law).
Coastal land/Tidelands trust lands - more regulations here and extra time needed to enforce loans.
Lenders' using casualty insurance and condemnation awards to pay down loan - Some California laws limit a lender's use of insurance and condemnation awards to pay down principal balance.
Limitations on late fees - California courts can limit right of lender to impose prepayment penalties, late charges and default rate of interest for defaults by borrower.
Qualification to do business in California - a non-California based lender (other than a national bank) needs to qualify to do business in California.
Attorney fee provisions in contract - In any action on a contract where it provides that attorneys' fees and costs incurred to enforce provisions of such contract shall be awarded to one of the parties, California law at Civil Code 1717 et. seq. says that prevailing party, whether that party specified in contract or not, shall be entitled to reasonable attorneys' fees in addition to costs and necessary disbursements. This can provide leverage for borrowers.
So lenders must consult with qualified real estate attorneys and carefully plan enforcement of terms of their mortgage loan contracts in California.
Well when you think they have thought of everything, Fannie is now in the Landlord business!! I am not sure how I feel about this and whether or not it will realistically make a difference in the process of filtering the problems out of the market. However, it does help the struggling homeowners from becoming homeless which is a good thing (Just in case, if you haven't heard, homeslessness is on the rise and it partly does have a relationship to the foreclosure problem).
So what does this all mean? I suggest busting out the glasses and get reading.
Fannie Maeannounced Thursday that it will allow troubled homeowners lease their homes versus losing them through foreclosure and eviction. The new program is directed at providing greater home security to distressed borrowers who can't afford their mortgage payments and do not qualify for a loan modification, however who can able to afford the rent.
The program is designed so that borrowers transfer their property deed to Fannie, this is also known as a deed-in-lieu of foreclosure. A deed-in-lieu will adversely affect a borrower's credit score, but it isn't as damaging as a straight-up foreclosure, even though the end result is the same which is that "Fannie gets back the property".
In the new "Deed for Lease" program, borrowers will need to:
Qualify for a deed-in-lieu under Fannie's current guidelines
Demonstrate that they have enough income to pay a market rent, they'll be required to sign a lease for up to 12 months.
Here's a few question and answers about the program:
How do I know if Fannie owns or guarantees my loan?
Fannie Mae has a loan look-up Web site that lets borrowers see whether their loan is held or backed by Fannie, and therefore eligible for the program. Mortgages backed by the FHA and other government agencies don't qualify.
Can homeowners qualify for the program if they're current on the mortgage?
No. The program is open only to borrowers who have missed a payment and who therefore can show that they can't afford their current mortgage payments. A borrower's mortgage servicer must also show that the borrower isn't eligible for a loan modification. Potential tenants have to demonstrate that market rent wouldn't exceed 31% of their monthly gross income, and borrowers who are 12 or more payments past due on their mortgage aren't eligible.
Could borrowers-turned-tenants buy their home back when the lease expires?
Unlikely. Fannie says that at the end of the initial lease term, they may choose to extend the lease or "offer for sale to any qualified home buyer." Most borrowers who have recently missed mortgage payments and executed a deed-in-lieu probably won't have strong enough credit or enough cash to be able to buy a home.
Can borrowers intentionally default in order to be eligible for the lease program? A
gain, it's unlikely. Fannie says that "borrowers would not qualify for a deed-in-lieu, and therefore not qualify for a deed for lease, if it is determined that they can afford their current mortgage payments."
Are there any other restrictions?
Second lien mortgages aren't eligible, and any subordinate liens secured against the borrower must be released. Borrowers can't be involved in an active bankruptcy proceeding and aren't parties to any litigation on the property or the loan. Properties also couldn't be rented if rented homes would violate zoning or homeowners' association rules.
U.S. House of Representatives today voted by overwhelming positive vote of 403-12 to approve the Unemployment Compensation Extension Act (H.R. 3548) that included, as an amendment, the extension and expansion of the Homebuyer Tax Credit.
This bill with bipartisan support already passed in the U.S. Senate so now will advance from Congress to the White House for President Obama's signature.
The Administration already has signaled its support of the Homebuyer Tax Credit amendment and the President's intention to sign the bill into law.
So extension and expansion of the US Homebuyer Tax Credit will soon be a reality.
Government is taking action to help our industry and the economy. This extended and expanded Homebuyer Tax Credit will be available to qualified home buyers in the first half of 2010 and will benefit our business and U.S. economy.
For other information about this expected extension and expansion of the homebuyer tax credit, contact your local REALTOR now and as soon as possible to buy a home and tax advantage of this tax credit.
Gene Wunderlich, Realtor at Temecula, Riverside County, CA, member of CAR board of directors, is a writer, a funny guy, and has an idea or two about government relations.
I reblog his post Time Magazine vs The Realtor Party. - his reminder to the columnist at Time Magazine that REALTORS and National Association of Realtors are proud to be a powerful voice at our nation's capital. Keep it going Gene.
A
recent issue of Time Magazine carried an article by The Curious
Capitalist / Justin Fox
entitled
'Get Homes Off Welfare" . I'm not sure if Fox
really is a capitalist at heart, or if he's just curious about the
concept. Either way he makes a semi-literate case against the housing
industry in general and the governments support of same. He bemoans the
fact that homeowners are 'at
the receiving end of a truly staggering array of subsidies and tax
breaks', hard to put a price tag on but 'clearly in the
hundreds of billions of dollars a year.'
He claims that even with
all this aid homeowners aren't doing so well and then trots out the old
canards about real estate values falling by $4 trillion the past couple
years and the millions of foreclosures and people 'booted from their
homes'. Like that's somehow 'housings' fault. He bemoans the fact that
80% of mortgage loans this year are backed by the government and their
minions Fannie, Freddie & Ginnie at lower interest rates than
private market mortgages. He lumps in the Federal Reserve for
good measure blaming them for artificially lowering interest rates by
buying up Freddie, Fannie & Ginnie securities. All of
this, according to Fox, puts taxpayers on the hook when things go
disastrously wrong, as they so spectacularly have the past couple
years.
He goes on to slam the $8,000 first-time homebuyer tax
credit and then progresses to the mortgage interest deduction, property
tax deductions and capital gains tax breaks , which he
believes cost the government at least $100 Billion this year and every
year. With nary a nod to the economic benefit and the
hundreds of billions in revenue & jobs provided by housing,
building and ancillary industries, he goes on to complain that the bulk
of tax benefits flow to the upper end of the income spectrum and to the
coasts.
Let me get this straight
- Justin thinks homeowners
aren't taxed enough and that too many breaks go to the wealthy and the
coastal elitists. Hmmmm, I may have just figured out his
position on capitalism after all. That's curious.
Then he posits that
subsidies have a side effect that 'push
us to buy rather than rent'. These dastardly subsidies
not only push us to buy, but force us to buy more home than
we can afford & drive prices up and that subsequently
our homeownership becomes a 'ball and chain' if workers want to move
where jobs are more plentiful. He says that subsidizing
housing resulting in appreciating home values is good for sellers but
not renters or first time buyers. Maybe he should peddle that claptrap
to the 350,000 first-time homebuyers who have recently become
homeowners thanks to this subsidy.
In fairness, every point Justin raises is valid.
But as with so many in the media today, he appears to be in touch with
only 1/2 the picture, the half that supports his agenda. Or maybe he
was just on deadline and didn't have time to do an objective article,
or he just thought this would be clever or something. Who
knows.
He closes his article by
stating the obvious - that rising
prices are always good news for real estate agents, mortgage lenders
and homebuilders. (Jeez, Justin, what might you
conclude about our fortunes during the past 3 years of plummeting
prices?)
This part I love. "These groups are
powers in Washington. The National Association of Realtors gave more
money than any other group to candidates in the last election ($4
million). Its 1.1 million members can do a lot of lobbying." Justin,
you got that 100% correct right there.
Finally he refers to
Dwight Eisenhower's caution against the 'military-industrial complex'
by issuing a call-out to the 'real-estate
industrial complex'. I love that. Sure maybe
it's just little old Justin Fox, the Curious Capitalist, who has
recognized that fact, but it's a start.
I don't know about you but when it comes
to advocating on behalf of homeowners, or standing up for private
property rights and supporting the industry that drives our economy,
I'm damn proud to be part of the real-estate industrial complex.
Except, Justin, for future reference, we call ourselves 'The Realtor Party'.
Try to get it right if they give you any column inches in the future. Of course that's just my opinion... I could be wrong.
Will the Expected Extension of the US Homebuyer Tax Credit help business in our state, be a boost for our clients, the housing market and be good for our US and local economies?
Good question, and we will all see what develops, whether the measure can be worked out between Senate and Congress, and if it passes whether Obama will sign it into law. Then we'll see how buyers and consumers react between December 1 and April 30 of next year.
WE NEED ENCOURAGEMENT FOR HOME SELLERS HERE AT ORANGE COUNTY. Too many are nervous and waiting to sell their homes. Our local markets need more homes for sale at under $800k.
This new measure could possibly encourage more owners to be sellers, to have positive expectations and get their homes cleaned up and ready for market and sale.
The government's first-time home buyer $8,000 tax credit has inspired a lot of sales this year, estimated as many as 400,000 by the time the program ends on November 30.
US Senate negotiators have agreed on a tentative deal on extending and slightly expanding the tax credit.
$8,000 tax credit extension would cover first-time home buyers who sign a contract for a home by the end of April 2010 and close by the end of June 2010.
Creates a $6,500 tax credit for those who buy a home, but have owned a home for at least five consecutive years out of the past eight years.
Under the $8,000 tax credit extension, income limit would be raised to $125,000 a year for individuals and $225,000 for married couples.
Like most REALTORS and real estate professionals, we are concerned about business and our economy, employment in California, and are in favor of this homebuyer tax credit extension. We believe it can help improve our US and local economies, put buyer consumer money back into the markets, and assist to create jobs in this important real estate industry.
Home sold units at CA increased 2.1 percent in September as compared with the same period a year ago, while the median price of an existing home declined 7.3 percent.
"The market's momentum continued in September, as many home buyers took advantage of the federal tax credit for first-time home buyers," said C.A.R. President James Liptak.
"The success of the federal tax credit is clear. Nearly 70 percent of first-time home buyers report that the tax credit was ‘the most important' or a ‘very important' factor in their decision to buy a home.
Closed escrow sales of existing, single-family detached homes in California totaled 530,520 in September at a seasonally adjusted annualized rate.
This is according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide.
Statewide home resale activity increased 2.1 percent from the revised 519,530 sales pace recorded in September 2008. Sales in September 2009 increased 0.6 percent compared with the previous month.
So they anticipate more than 519,000 homes will be sold in California this year.
C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in September 2009 was 4.2 months (short market time) as compared with 6.5 months (revised) for the same period a year ago.
This shows number of months needed to deplete the supply of homes on the California market at the current sales rate.
California median Home sold prices were down 7.3 percent in September 2009, which is as expected.
Cal State Fullerton's 2009 economic forecast now released with comment by Anil Puri, dean of the Mihaylo College of Business and Economics. This expert had predicted in April 2009 that the economy rebound but not quickly.
Good news for workers ~
Orange County payrolls should start showing job growth in second half of 2010.
OC employers will add about 9,900 net new jobs next year (which is off the average annual pace of 17,400 since 1990).
Puri said about Orange County ~
Expect to see a peak in unemployment in the first quarter of 2010.
Unemployment peak should be somewhere between five to six months after the official end of the recession. (Orange County unemployment is now at high of 9.4 percent in September 2009).
He said he believes in a faster economic rebound in terms of gross domestic product and predicts GDP will grow at 3.3 percent during 2010 after declining during the recession.
This report points to strong recent economy performance by some foreign countries, that lower U.S. dollar will help U.S. exports, and that the housing market appears to have already hit bottom.
We have seen a turn in Orange County residential real estate, which is on upswing for market under $1 million.
The biggest part of the US economy stimulus of $787 billion is expected to hit during last quarter 2009 and first at 2010. We will see how, if at all, this effects the Orange County economy.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Colonel William Barber, US Marine Corps, US Medal of Honor, WWII, from Orange County, CA.
When a lender wants to enforce terms of a loan secured by California real property, certain issues must be considered.
Direct lender and licensed in most states across the U.S.
This bill with bipartisan support already passed in the U.S. Senate so now will advance from Congress to the White House for President Obama's signature. 
A
recent issue of Time Magazine carried an article by The Curious
Capitalist / 
;)
;)
